Temporary Expanded Collateral Repo Facility - Market Notice 10 October 2022

The Bank of England is today announcing the launch of the Temporary Expanded Collateral Repo Facility (TECRF) to support market functioning.
Published on 10 October 2022

Market notice

In line with the Bank’s financial stability objective and in order to avoid dysfunction in core funding markets, the Bank is today launching a Temporary Expanded Collateral Repo Facility (the facility). The facility is to enable banks to help ease liquidity pressures facing their client LDI funds through liquidity insurance operations. For the full press release see the Bank's website.

Eligible collateral, haircuts and settlement

Banks may access this facility using Levels A, B or C collateral as set out on the Bank’s website.

In light of market conditions, the range of Sterling Monetary Framework (SMF) eligible collateral is being expanded in relation to this facility only, with effect from this Market Notice, to include non-financial corporate bonds of credit quality broadly equivalent to Baa3/BBB- or above, in addition to existing SMF eligible collateral. The full set of eligibility criteria and haircuts for this facility can be found on the Bank’s website at Level C collateral securities and summary of haircuts, respectively. There are no other changes to SMF collateral eligibility.

Settlement will occur on the same day as the drawing provided that the collateral is first pre-positioned.

For further information on settlement instructions see Settlement and collateral management.

Period of operations

This facility will remain open on a daily basis until Thursday 10 November 2022. Counterparties may request to use the facility at any time up until 12 noon on the intended day of drawdown. Counterparties are required to complete a transaction notice available on the Bank's website and submit via email to markets-smddealers@bankofengland.co.uk as soon as possible, and no later than 12 noon on the intended day of drawdown.

In order to assist with the smooth operation of the facility, eligible counterparties are required to notify the Bank of proposed collateral that they intend to use as soon as possible, and no later than 17:00 Monday 7 November 2022. This will enable the Bank to facilitate drawings effectively until the closing date of 10 November. Notification should be sent via email to: markets-smddealers@bankofengland.co.uk

Facility Pricing

The fees will be set at a flat rate of 15bps above Bank Rate. The fee rate will not increase with size of drawing.

Term and type of drawings

Initial drawings are for a period of up to 30-day term, but participants can apply to roll drawings by submitting a new transaction notice to markets-smddealers@bankofengland.co.uk. Drawings may also be repaid at any point. 

Participants should note that, in accordance with the Existing Scheme Documents (as defined below) as they apply to the facility, the Bank will transfer cash in sterling to Participants under the facility.

Eligible counterparties

Existing Participants in the SMF who have access to the Discount Window Facility (DWF) will be eligible to participate in the facility without any further admission requirements. Entering into a transaction under the facility will constitute acceptance by the relevant Participant of the terms and conditions of the facility as set out in this Market Notice.

Eligibility and continued access to the facility will be dependent upon a Participant and other members of its Group acting in good faith with a view to achieving the objectives of the facility as set out above and in the press release.

Published Information

Following the facility’s closure, the Bank will publish aggregate usage of the scheme at 3pm on Thursday 17 November 2022.

Scheme documentation

For speed and ease of access, the facility will be governed by the Discount Window Facility (DWF) documentation, and forms part of the SMF. However, this is a separate facility and the abovementioned terms replace those set out in DWF documentation in order to provide the targeted support, consistent with the aims of the facility.

The terms of the DWF as set out in the terms and conditions of the SMF (the Terms and Conditions) and the operating procedures (the Operating Procedures and, together with the Terms and Conditions, the Existing Scheme Documents) will apply to transactions under the facility as such Existing Scheme Documents are amended pursuant to this Market Notice. The amendments to the Existing Scheme Documents set out in this Market Notice are made pursuant to Clause 8 of Part A of the Terms and Conditions (General Terms and Conditions).

The Bank reserves the right to amend any and all terms of this facility at its sole discretion.

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